What's the future for cash in New Zealand?

Release date

19 June 2019

If cash becomes less accepted and available as a means of payment, then the Reserve Bank says that New Zealanders who are already left out of the banking or digital worlds may be severely disadvantaged.

“We see these issues as being about less cash, and not becoming cashless,” says Reserve Bank Governor Adrian Orr. “There’s the real possibility of a contraction in the cash system which could end up affecting lives.”

“We think New Zealand should be making conscious decisions about the future of cash so that we can be prepared for future innovations, and ensure that sectors of society are not unfairly disadvantaged because cash falls out of favour,” Mr Orr says.

The Bank also says that international tourists, people in the four Pacific countries which use New Zealand currency, and people in New Zealand who use cash for cultural customs might all be negatively affected without workable substitutes to cash.

Meanwhile, the Bank suggests cash gives privacy and freedom to spend that other payment methods do not, and its ability to back-up other payment methods in a crisis also needs examination. The potential consequences of cyber threats at national and personal levels might also be elevated with less cash around.

The positives and negatives of decreased cash use may balance out for people’s ability to budget, New Zealand’s financial stability, and government revenue, the issues paper says.

One upside of less cash could be increased efficiency and reduced overall costs for electronic payments systems.

"As well as implications for cash users, there are consequences for the Reserve Bank and the banking industry. This includes choices for the Reserve Bank’s next generation of vaulting, and how to ensure the system for distributing and circulating cash is as cost efficient as possible with fewer transactions. We need to be ready to face the cash equivalent of falling posted letter volumes,” Mr Orr says. The Bank is working with its trading bank customers and others in the cash system to look at those issues.

"We are hoping that the kōrero building from the release of the paper today will give challenge, amplification, and most particularly put human faces and voices to the issues raised by less cash,” says Mr Orr. The Bank is urging discussion and feedback so that it refine its views and develop options to help manage the future of cash.

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